Google has won an important case in Australia dealing with sponsored links. Australia's highest court has ruled that the company is not responsible for the messages carried by the links turned up by users who avail themselves of Google's search engine. More here from Reuters, here from Bloomberg. Here is a link to the ruling from Australia's High Court. The Court said in part:

It is axiomatic that the Google search engine operates by the mechanism that users' search requests are framed as search terms chosen by the user for the purpose of generating organic search results. What every advertiser seeks to achieve by use of the AdWords program is that its sponsored links will be triggered by search terms entered by a user (corresponding to keywords chosen by the advertiser) which indicate that the user may have an interest in the advertiser's products or services. Google has no control over a user's choice of search terms or an advertiser's choice of keywords.

The ACCC contended that Google, rather than the advertisers, "produced" (in the sense of making or creating) the sponsored links which are the subject of this appeal. That submission must be rejected. It is critical to appreciate that, even with the facility of keyword insertion, the advertiser is the author of the sponsored link. As Google correctly submitted, each relevant aspect of a sponsored link is determined by the advertiser. The automated response which the Google search engine makes to a user's search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays.

That the display of sponsored links (together with organic search results) can be described as Google's response to a user's request for information does not render Google the maker, author, creator or originator of the information in a sponsored link. The technology which lies behind the display of a sponsored link merely assembles information provided by others for the purpose of displaying advertisements directed to users of the Google search engine in their capacity as consumers of products and services. In this sense, Google is not relevantly different from other intermediaries, such as newspaper publishers (whether in print or online) or broadcasters (whether radio, television or online), who publish, display or broadcast the advertisements of others. The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries. To the extent that it displays sponsored links, the Google search engine is only a means of communication between advertisers and consumers.

The primary judge's findings about the way in which ordinary and reasonable users of the Google search engine would understand the sponsored links were not disturbed in the Full Court. These findings – that ordinary and reasonable users would have understood the sponsored links to be statements made by advertisers which Google had not endorsed, and was merely passing on for what they were worth – were plainly correct. They also support the conclusion reached above. On its face, each sponsored link indicates that its source is not Google, but an advertiser. The heading "Sponsored Links" appears above both top left sponsored links and right side sponsored links, and the URL of the advertiser, appearing within each sponsored link, clearly indicates its source. Ordinary and reasonable users of the Google search engine would have understood that the sponsored links were created by advertisers. Such users would also have understood that representations made by the sponsored links were those of the advertisers, and were not adopted or endorsed by Google.

In its notice of contention, the ACCC asserted that the role of Google personnel advising or assisting advertisers in the selection of keywords (described above in relation to both the STA Travel advertisements and the Carsales advertisements) was relevant in determining whether Google had engaged in misleading or deceptive conduct. The evidence of the role of Google's personnel in relation to the STA Travel advertisements and the Carsales advertisements was not irrelevant. However, while it showed correspondence between Google personnel and the advertisers concerned, it never rose so high as to prove that Google personnel, as distinct from the advertisers, had chosen the relevant keywords, or otherwise created, endorsed or adopted the sponsored links.

It is true that Google has a system in place which will preclude use of certain keywords as triggers for advertisements when Google is on notice of a possible misrepresentation to which an advertiser's choice of keywords may give rise. However, the facts in respect of the Ausdog advertisement show the difficulty that Google might have, in the absence of notification, in determining whether a trader whose name (or name and URL) appears in the headline of an advertiser's sponsored link is a competitor or associate of the advertiser.

Taken together, the facts and circumstances considered above show that Google did not itself engage in misleading or deceptive conduct, or endorse or adopt the representations which it displayed on behalf of advertisers.